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Agency 2.5 How Agencies Are Transforming  for the Future Presented by Tim Williams ©  ignition   consulting group www.igni...
Agencies? Agencies are at an  Inflection Point <ul><li>Fragmentation and addressability of media and audiences </li></ul><...
“ An inflection point is a time in the life of a business when its fundamentals are about to change.  Inflection points ca...
http://www.youtube.com/watch?v=ERGrSQoY5fs “ The Last Advertising Agency on Earth”
Media  Production houses Client in-house resources Crowdsourcing Agencies Management consultancies Brand consultancies Mar...
Media companies becoming agencies
Marketers that expect to do more business directly with media companies: 52% Marketers that expect to do more business wit...
Becky Saeger Chairman, Association of National Advertisers (ANA) “ If I were an agency, I would be really worried about be...
Ideation Execution Production de-coupling Another way agencies are losing leverage in the relationship
Crowdsourcing as competition
Future roles for  agencies? Media brand owners Content collaborators Content curators Program producers Network creators D...
Interrupting Imperatives for transforming the agency Engaging
Exposure Engagement Reach Frequency Cost per thousand Attentiveness Receptivity Buzz potential Efficiency Effectiveness
http://www.youtube.com/watch?v=SI-rsong4xs “ The Best Job in the World”
“ Instead of reaching  80 million people, let’s reach a million in your target and spend 10 minutes with them.” Michael La...
 
Implications and opportunities  for marketing organizations <ul><li>We need to change our language. </li></ul><ul><li>Enga...
Mass media as channels Imperatives for transforming the agency Everything as channels
PAID EARNED OWNED Three main classes of media
PAID
PAID Media advertising
PAID The store as media
PAID The physical world as media
PAID EARNED
EARNED Traditional mass media
EARNED Blogs as media
EARNED Viral videos as media http://www.youtube.com/watch?v=VQ3d3KigPQM “ T-Mobile Dance”
PAID EARNED OWNED
OWNED The brand’s online properties as media Microsoft.com OfficeLive.com msn.com Xbox.com
The brand’s online properties as media OWNED
The product itself as media OWNED
PAID EARNED OWNED Instead of this … …  this.
Implications and opportunities  for marketing organizations <ul><li>Plan touch points and communications channels, not med...
Brand perception Imperatives for transforming the agency Brand experience
Agencies are missing revenue opportunities by stopping at pre-purchase
Lee Clow TBWA/ChiatDay “ The best ad we ever did for Apple is the Apple Store.”
Parker  Stoner, Swanson Russell Associates
Behavioral Economics: A new strategic imperative for agencies Rory Sutherland, President Institute of Advertising Practiti...
An advertising campaign to persuade mothers that chicken soup is a good for colds and flu … Behavioral Economics Placing c...
Agencies should be in the business of Choice Architecture Behavioral Economics
Implications and opportunities  for marketing organizations <ul><li>Help optimize how customers experience the brand, not ...
Consumers as audience Imperatives for transforming the agency Consumers as media
Which is your mental map?
What advertisers spend on media What consumers spend on media
“ Today, the average 14-year-old can create a global television network with applications that are built into her laptop.”...
http://www.youtube.com/watch?v=5YGc4zOqozo “ United Breaks Guitars” Consumers as media
Consumers as media
“ Customer service is the new media department.” Pete Blackshaw
Implications and opportunities  for marketing organizations <ul><li>Understand the not just the demographics but the techn...
Persuasion Imperatives for transforming the agency Utility
Utility instead of persuasion
Utility instead of persuasion
Utility instead of persuasion http://www.youtube.com/watch?v=qOr5_GaGnPc
Implications and opportunities  for marketing organizations <ul><li>Put more effort into  helping  consumers instead of se...
One-to-many Imperatives for transforming the agency One-to-one
The ideal agency of the future? +
Mass  Messaging High volume mass communications with imprecise targeting with little or no segmentation or personalization...
 
Broadcasting Narrowcasting Spending a lot of money to produce a little content to reach  a lot of people. Spending a littl...
Narrowcasting “ Will It Blend?” http:// www.youtube.com/watch?v=oRr7N7A4Wc0
Implications and opportunities  for marketing organizations <ul><li>Soon all media will be both searchable and addressable...
Digital department Imperatives for transforming the agency Digital competency
“ Digital spending will double in the next five years … …  but advertising budgets won’t.” Digital marketing is the new ma...
THEN NOW
From great in traditional to great in digital
Marketers who use the same agency for both mass and digital are more satisfied
Verbal  Designer Visual  Designer THE NEW CREATIVE HYDRA Experience  Designer Experience Design (XD) User Experience (UX) ...
Implications and opportunities  for marketing organizations <ul><li>Digital must be at the core of the agency business mod...
Controlled communications Imperatives for transforming the agency Open conversations
Broadcast advertising Print advertising Out of home advertising Promotions Events Direct mail Trade shows Product placemen...
ROLE OF THE CHIEF COMMUNITY OFFICER (CCO) <ul><li>Instead of just creating brand advertising, a CCO builds a community aro...
Social media as an agency service <ul><li>Social media audit </li></ul><ul><li>Helping to develop social media policies an...
 
“ Advertising in the future will be much more like PR.  We’ll be run more like a daily TV show or an interactive newspaper...
Implications and opportunities  for marketing organizations <ul><li>Learn to market “consumer-to-consumer” instead of just...
High Volume/Low Margin Imperatives for transforming the agency Low Volume/High Margin
HIGH LOW Relative value of agency services Value perceived by client  Cost incurred by agency  Diagnose Prescribe Create E...
Architect Which are you? General Contractor Sub-Contractor
Project Lifeline Higher Value Services Consumer insights Strategic planning Concept development Reputation management Prod...
Implications and opportunities  for marketing organizations <ul><li>Realize that the traditional agency cost structure can...
Full scale Imperatives for transforming the agency Agile
Agencies are organized like a classical orchestra in a jazz age. Rashid Tobacowala
The Agile Manifesto <ul><li>Build projects around motivated individuals. Give them the environment and support they need, ...
Direction Teams  <ul><li>1.  Business Director </li></ul><ul><li>2.  Planning Director </li></ul><ul><li>3.   Channel Dire...
 
Implications and opportunities  for marketing organizations <ul><li>An always-on marketing program requires agile teams an...
Selling time Imperatives for transforming the agency Selling value
http://www.youtube.com/watch?v=R2a8TRSgzZY “ The Vendor-Client Relationship”
RFPs that focus extensively on price. Mandates to reduce fees without also reducing SOW. Demands for extensive disclosure ...
<ul><li>Salaries + Overhead + Desired Profit  </li></ul><ul><li>Expected Hours </li></ul>What’s the right formula for agen...
Why time-based pricing is the wrong paradigm <ul><li>Looks in the wrong place for value (inside vs. outside) </li></ul><ul...
“ Do you want to haggle over hours, or do you want ideas that build the momentum of your brand?” Jeff Hicks President Cris...
Cost-Led Pricing Price-Led Costing Customer  Value  Price  Cost  Product Product  Cost  Price  Value   Customer
Estimating hours isn’t pricing. Counting costs isn’t pricing. Setting an “accurate” billable rate isn’t pricing. Costing i...
Chief Compensation Officer Neal Grossman
“ This is not the death of marketing and media, but a dramatic rebirth in the way the end of the last Ice Age yielded more...
The complete Agency 2.5 seminar is available on a custom basis to agencies and organizations. www.ignitiongroup.com Direct...
An invitation to visit  Ignition’s new online resource center www.ignitiongroup.com
Books by Ignition’s Tim Williams  Take  a Stand for Your  Brand: Building a Great Agency Brand  From the Inside Out Positi...
www.ignitiongroup.com
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Agency 2.5

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Some of the key concepts from Ignition's workshop "Agency 2.5: How Agencies Are Transforming for the Future."

The complete workshop is available by contacting Tim Williams at twilliams@ignitiongroup.com

Published in: Business, News & Politics
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Agency 2.5

  1. 1. Agency 2.5 How Agencies Are Transforming for the Future Presented by Tim Williams © ignition consulting group www.ignitiongroup.com A selection of key concepts from
  2. 2. Agencies? Agencies are at an Inflection Point <ul><li>Fragmentation and addressability of media and audiences </li></ul><ul><li>Democratization of creativity </li></ul><ul><li>Inexpensive and instantaneous production </li></ul><ul><li>Online interconnectedness </li></ul><ul><li>Digitization of everything </li></ul><ul><li>Brand advocacy in place of brand management </li></ul><ul><li>Pricing pressures due to oversupply of providers </li></ul><ul><li>And … </li></ul>
  3. 3. “ An inflection point is a time in the life of a business when its fundamentals are about to change. Inflection points can be caused by technological change, but are about more than technological change. They can be caused by competitors, but they are about more than just competition. They are full-scale changes in the way a company or industry does business.”
  4. 4. http://www.youtube.com/watch?v=ERGrSQoY5fs “ The Last Advertising Agency on Earth”
  5. 5. Media Production houses Client in-house resources Crowdsourcing Agencies Management consultancies Brand consultancies Marketing research firms Competition both upstream and downstream
  6. 6. Media companies becoming agencies
  7. 7. Marketers that expect to do more business directly with media companies: 52% Marketers that expect to do more business with agencies: 27%
  8. 8. Becky Saeger Chairman, Association of National Advertisers (ANA) “ If I were an agency, I would be really worried about being disintermediated. More and more, agencies are almost in the way sometimes.”
  9. 9. Ideation Execution Production de-coupling Another way agencies are losing leverage in the relationship
  10. 10. Crowdsourcing as competition
  11. 11. Future roles for agencies? Media brand owners Content collaborators Content curators Program producers Network creators Data providers Data aggregators Rights managers Brand guardians Source: The Future Foundation
  12. 12. Interrupting Imperatives for transforming the agency Engaging
  13. 13. Exposure Engagement Reach Frequency Cost per thousand Attentiveness Receptivity Buzz potential Efficiency Effectiveness
  14. 14. http://www.youtube.com/watch?v=SI-rsong4xs “ The Best Job in the World”
  15. 15. “ Instead of reaching 80 million people, let’s reach a million in your target and spend 10 minutes with them.” Michael Lazerow, CEO
  16. 17. Implications and opportunities for marketing organizations <ul><li>We need to change our language. </li></ul><ul><li>Engagement requires a new set of metrics. </li></ul><ul><li>Learn how to engage small audiences for a long time instead of engaging large audiences for a short time. </li></ul>
  17. 18. Mass media as channels Imperatives for transforming the agency Everything as channels
  18. 19. PAID EARNED OWNED Three main classes of media
  19. 20. PAID
  20. 21. PAID Media advertising
  21. 22. PAID The store as media
  22. 23. PAID The physical world as media
  23. 24. PAID EARNED
  24. 25. EARNED Traditional mass media
  25. 26. EARNED Blogs as media
  26. 27. EARNED Viral videos as media http://www.youtube.com/watch?v=VQ3d3KigPQM “ T-Mobile Dance”
  27. 28. PAID EARNED OWNED
  28. 29. OWNED The brand’s online properties as media Microsoft.com OfficeLive.com msn.com Xbox.com
  29. 30. The brand’s online properties as media OWNED
  30. 31. The product itself as media OWNED
  31. 32. PAID EARNED OWNED Instead of this … … this.
  32. 33. Implications and opportunities for marketing organizations <ul><li>Plan touch points and communications channels, not media. </li></ul><ul><li>Start with owned, then earned, then paid channels. </li></ul><ul><li>Better yet, help your clients build the marketing into the product. </li></ul>
  33. 34. Brand perception Imperatives for transforming the agency Brand experience
  34. 35. Agencies are missing revenue opportunities by stopping at pre-purchase
  35. 36. Lee Clow TBWA/ChiatDay “ The best ad we ever did for Apple is the Apple Store.”
  36. 37. Parker Stoner, Swanson Russell Associates
  37. 38. Behavioral Economics: A new strategic imperative for agencies Rory Sutherland, President Institute of Advertising Practitioners (IPA), Vice Chairman, Ogilvy, London “ Hundreds of agencies have developed models for ‘how advertising works.’ What’s needed now is for agencies to base their business on ‘how people work.’
  38. 39. An advertising campaign to persuade mothers that chicken soup is a good for colds and flu … Behavioral Economics Placing chicken soup next to the cold remedies. -- or --
  39. 40. Agencies should be in the business of Choice Architecture Behavioral Economics
  40. 41. Implications and opportunities for marketing organizations <ul><li>Help optimize how customers experience the brand, not just how they perceive it. </li></ul><ul><li>Help your clients move further up the effectiveness hierarchy. </li></ul><ul><li>Become expert in brand interactions, not just brand messages. </li></ul>
  41. 42. Consumers as audience Imperatives for transforming the agency Consumers as media
  42. 43. Which is your mental map?
  43. 44. What advertisers spend on media What consumers spend on media
  44. 45. “ Today, the average 14-year-old can create a global television network with applications that are built into her laptop.” Randall Rothenberg CEO, Interactive Advertising Bureau
  45. 46. http://www.youtube.com/watch?v=5YGc4zOqozo “ United Breaks Guitars” Consumers as media
  46. 47. Consumers as media
  47. 48. “ Customer service is the new media department.” Pete Blackshaw
  48. 49. Implications and opportunities for marketing organizations <ul><li>Understand the not just the demographics but the technographics of your audience. </li></ul><ul><li>Make it easy to share and distribute your content. </li></ul><ul><li>Proactively plan for consumers as “media.” </li></ul><ul><li>Realize that your brand will never have enough money to outspend consumers. </li></ul>
  49. 50. Persuasion Imperatives for transforming the agency Utility
  50. 51. Utility instead of persuasion
  51. 52. Utility instead of persuasion
  52. 53. Utility instead of persuasion http://www.youtube.com/watch?v=qOr5_GaGnPc
  53. 54. Implications and opportunities for marketing organizations <ul><li>Put more effort into helping consumers instead of selling them. </li></ul><ul><li>Look at “utility” as an opportunity to develop some of your own intellectual property. </li></ul>
  54. 55. One-to-many Imperatives for transforming the agency One-to-one
  55. 56. The ideal agency of the future? +
  56. 57. Mass Messaging High volume mass communications with imprecise targeting with little or no segmentation or personalization Mass Customization Messages deployed based on dynamic analysis of real-time behavior across channels
  57. 59. Broadcasting Narrowcasting Spending a lot of money to produce a little content to reach a lot of people. Spending a little money to product a lot of content to reach a few people.
  58. 60. Narrowcasting “ Will It Blend?” http:// www.youtube.com/watch?v=oRr7N7A4Wc0
  59. 61. Implications and opportunities for marketing organizations <ul><li>Soon all media will be both searchable and addressable. </li></ul><ul><li>The new agency skill set is mass customization in place of mass messaging. </li></ul><ul><li>Agencies can package and sell data analytics as a service. </li></ul><ul><li>Precise addressability will allow more niche brands to advertise, creating more opportunities for agencies. </li></ul>
  60. 62. Digital department Imperatives for transforming the agency Digital competency
  61. 63. “ Digital spending will double in the next five years … … but advertising budgets won’t.” Digital marketing is the new mainstream marketing.
  62. 64. THEN NOW
  63. 65. From great in traditional to great in digital
  64. 66. Marketers who use the same agency for both mass and digital are more satisfied
  65. 67. Verbal Designer Visual Designer THE NEW CREATIVE HYDRA Experience Designer Experience Design (XD) User Experience (UX) Information Architecture (IA)
  66. 68. Implications and opportunities for marketing organizations <ul><li>Digital must be at the core of the agency business model, not an add-on. </li></ul><ul><li>There will soon be no difference between “traditional” agencies and “digital” agencies. </li></ul><ul><li>Being digital means technologists must join creative and media teams. </li></ul><ul><li>An increase in digital work will produce more agency income, not less. </li></ul>
  67. 69. Controlled communications Imperatives for transforming the agency Open conversations
  68. 70. Broadcast advertising Print advertising Out of home advertising Promotions Events Direct mail Trade shows Product placement Media relations Community relations Employee relations Investor relations Crisis communications Media training Sales training Search engine marketing Online display advertising Sponsored online content E-mail marketing Interactive kiosks Mobile marketing Video gaming Website development Search engine optimization Online product reviews Online endorsements Blogs Microblogging Podcasts Opt-in online content Webinars Social media Offline Online Non-Paid Paid
  69. 71. ROLE OF THE CHIEF COMMUNITY OFFICER (CCO) <ul><li>Instead of just creating brand advertising, a CCO builds a community around the brand using multiple channels. </li></ul><ul><li>Instead of just sending messages, the CCO monitors and responds to the community. </li></ul><ul><li>Instead of focusing on pre-sale activities and seeing areas like service and support as “someone else’s job,” a CCO follows what consumers are telling the brand and each other. </li></ul>Chuck Brymer, CEO DDB Worldwide “ The Nature of Marketing”
  70. 72. Social media as an agency service <ul><li>Social media audit </li></ul><ul><li>Helping to develop social media policies and procedures </li></ul><ul><li>Ambassador training </li></ul><ul><li>Submitting to online directories </li></ul><ul><li>Blog creation, seeding and maintenance </li></ul><ul><li>Blog monitoring and participation </li></ul><ul><li>Tweeting and retweeting </li></ul><ul><li>Social network development </li></ul><ul><li>Online groups and forums </li></ul><ul><li>Online publicity </li></ul><ul><li>Posting and seeding videos and other branded content </li></ul><ul><li>Tracking, analyzing and reporting results </li></ul>
  71. 74. “ Advertising in the future will be much more like PR. We’ll be run more like a daily TV show or an interactive newspaper than an advertising factory.” Richard Pinder COO, Publicis Worldwide
  72. 75. Implications and opportunities for marketing organizations <ul><li>Learn to market “consumer-to-consumer” instead of just “brand-to-consumer.” </li></ul><ul><li>Shift the agency’s skill set beyond “presentation” to “participation” and package it as a service. </li></ul><ul><li>Erase the artificial line between “advertising” and “public relations.” </li></ul><ul><li>Make publicity a central goal of your marketing efforts, not just a hoped-for by-product. </li></ul><ul><li>Experiment with ways to move what used to be offline, online (like product sampling, etc.) </li></ul>
  73. 76. High Volume/Low Margin Imperatives for transforming the agency Low Volume/High Margin
  74. 77. HIGH LOW Relative value of agency services Value perceived by client Cost incurred by agency Diagnose Prescribe Create Execute
  75. 78. Architect Which are you? General Contractor Sub-Contractor
  76. 79. Project Lifeline Higher Value Services Consumer insights Strategic planning Concept development Reputation management Product development Marketing ideation Connection planning Lower Value Services Programming and coding Pre-press work Print production Broadcast production Video production Revisions and resizes Media buying
  77. 80. Implications and opportunities for marketing organizations <ul><li>Realize that the traditional agency cost structure cannot support both high-value/high-cost services and low-value/low-cost services. </li></ul><ul><li>Understand that either of these two business models (idea business vs. execution business) is viable, but they are different businesses requiring different cost and pricing structures. </li></ul>
  78. 81. Full scale Imperatives for transforming the agency Agile
  79. 82. Agencies are organized like a classical orchestra in a jazz age. Rashid Tobacowala
  80. 83. The Agile Manifesto <ul><li>Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done. </li></ul><ul><li>Simplicity--the art of maximizing the amount of work not done--is essential. </li></ul><ul><li>At regular intervals, the team reflects on how to become more effective then adjusts its behavior accordingly. </li></ul><ul><li>The team welcomes changing requirements, even late in development. </li></ul><ul><li>The team delivers working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale. </li></ul>
  81. 84. Direction Teams <ul><li>1. Business Director </li></ul><ul><li>2. Planning Director </li></ul><ul><li>3. Channel Director </li></ul><ul><li>Content Director </li></ul><ul><li>Project Director </li></ul>
  82. 86. Implications and opportunities for marketing organizations <ul><li>An always-on marketing program requires agile teams and an agile approach. </li></ul><ul><li>The agile approach requires fewer people, fewer layers, and more autonomy. </li></ul><ul><li>The need for professional project management will only increase due to the complex demands of digital marketing. </li></ul>
  83. 87. Selling time Imperatives for transforming the agency Selling value
  84. 88. http://www.youtube.com/watch?v=R2a8TRSgzZY “ The Vendor-Client Relationship”
  85. 89. RFPs that focus extensively on price. Mandates to reduce fees without also reducing SOW. Demands for extensive disclosure of agency costs. Clients not forthcoming about marketing budgets Agency services “shopped” based on hourly rates. The branches of the compensation problem What is the root? The billable hour
  86. 90. <ul><li>Salaries + Overhead + Desired Profit </li></ul><ul><li>Expected Hours </li></ul>What’s the right formula for agency compensation? = Hourly Rate Hours Worked Fee Charged = Hours Worked Value Delivered =
  87. 91. Why time-based pricing is the wrong paradigm <ul><li>Looks in the wrong place for value (inside vs. outside) </li></ul><ul><li>Based on cost to agency rather than value to client </li></ul><ul><li>Assumes client is buying activities rather than outcomes </li></ul><ul><li>Puts emphasis on efficiency instead of effectiveness </li></ul><ul><li>Misaligns the economic interests of agency and client </li></ul>
  88. 92. “ Do you want to haggle over hours, or do you want ideas that build the momentum of your brand?” Jeff Hicks President Crispin Porter & Bogusky
  89. 93. Cost-Led Pricing Price-Led Costing Customer Value Price Cost Product Product Cost Price Value Customer
  90. 94. Estimating hours isn’t pricing. Counting costs isn’t pricing. Setting an “accurate” billable rate isn’t pricing. Costing is a science. Pricing is an art.
  91. 95. Chief Compensation Officer Neal Grossman
  92. 96. “ This is not the death of marketing and media, but a dramatic rebirth in the way the end of the last Ice Age yielded more advanced species than had every prospered on earth before.” Bob Garfield Advertising Age columnist and author of “The Chaos Scenario”
  93. 97. The complete Agency 2.5 seminar is available on a custom basis to agencies and organizations. www.ignitiongroup.com Direct inquiries to Tim Williams at [email_address] @IgnitionGroup @TimWilliamsICG
  94. 98. An invitation to visit Ignition’s new online resource center www.ignitiongroup.com
  95. 99. Books by Ignition’s Tim Williams Take a Stand for Your Brand: Building a Great Agency Brand From the Inside Out Positioning for Professionals: How Professional Knowledge Firms Can Differentiate Their Way to Success
  96. 100. www.ignitiongroup.com

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